Citi analysts initiated coverage on Werner Enterprises (NASDAQ:WERN) with a Sell rating and a price target of $34 on the stock. The bank’s bearish outlook is rooted in Werner’s exposure to discount retailers, which still hold elevated inventory-to-sales ratios compared to pre-COVID levels, suggesting further destocking is required.

While big-box retailers have largely completed their inventory reductions, the prolonged pressure on discount retail—exacerbated by market share gains from direct-to-consumer platforms like Temu and Shein—poses ongoing challenges for truckload carriers like Werner that serve this segment.

The analysts also noted recent trends of margin weakness at Werner, which raises concerns over the company’s earnings resilience during industry downturns. As a result, Werner’s performance may face prolonged headwinds in both volume and freight rate stability, particularly among its discount retail customers.